The 32 year old midfielder’s current deal at the Estadio Santiago Bernabeu was due to end in June, and in recent months it had been rumoured to be considering offers from a host of Europe’s top clubs including Juventus, Paris Saint-Germain, Chelsea, Manchester City, Manchester United and Liverpool.

The situation had been an increasing concern for Blancos coach Carlo Ancelotti, who had regularly encouraged the club and the player to agree terms, and Bernabeu fans, who have cheered the Basque player and chanted "Alonso Stay" during recent games.

It appeared such worries would soon be over when reports circulated widely that the player and his agent Inaki Ibanez were at the Bernabeu finalising the agreement with Madrid president Florentino Perez.

Alonso himself announced he was staying via twitter -- saying “This will continue to be my home for two more years. A pleasure to let you know. Very, very happy ¡¡Hala Madrid!!”.

Madrid soon released a club statement with more details of the agreement that ties him to the Liga giants for the next two years

“Real Madrid communicates the extension of the contract linking Xabi Alonso with the club for two more seasons, until June 30, 2016,” the statement said. “The player will talk in front of the media next Friday Jan. 10 at the Estadio Santiago Bernabeu's press room at 13.30.”